The UK’s Investment Association (IA) has today published a number of guidelines regarding the use of last look, seeking to address concerns that this practice can negatively affect the ability of asset managers to meet the needs of their clients.
As part of the guidelines, the IA has also identified a number of instances in which last look should no longer be considered acceptable due to the potential for misuse of information by the liquidity provider.
These include: pre-hedging during the last look window, trading activity based on information derived from rejected trades and trading activity based on information from a request for quotation which is in progress or those that are not won.
The paper has been a long time in the works, so the IA's proposed guidance around last look may not burst the bubble of those optimists who think last look is a dead issue, but it should concern providers that their clients apparently think they don't go far enough. That said, I also think this paper highlights how the buy side can be too demanding around certain issues when it could focus on having a more positive impact by doing something itself.